Standard & Poor’s (S&P) downgraded the rating of US Treasury Bonds from AAA to AA+ on 5/8/2011 (In India and some other countries 6/8/2011) and that shocked many. It is the first downgrade since 1917. The downgrade followed wrangling in US Congress over raising debt limit, which used to be a routine matter, from 14.3 trillion dollars. Since 1960 USA had raised debt limit 78 times without any problem but this time it was different. S&P stood out from Moody’s and Fitch which continued with AAA rating. Treasury Department criticized S&P. S&P justified its decision and said that if matters did not improve further downgrade to AA was possible.
China criticized USA and called for a new global reserve currency. China has US Treasury Bonds of more than one trillion dollars and foreign exchange reserves of more than three trillion dollars. China had not allowed yuan to appreciate to keep its exports to USA cheap. It has itself to blame. India and many other countries have done like China. For them the unthinkable has happened.
The downgrade should have happened in 2008 when the crash occurred and USA went on giving bailouts of billions of dollars. AIG alone had bailout of 163 billion dollars.
Many people blame Tea Party members in Republican Party for the prolonged negotiations. Tea stands for Taxes Enough Already and those members stood by their commitment to oppose new taxes. Deficit reduction is a problem but there was a solution in 2010 when Bush-era tax exemptions were to expire. Barack Obama wanted tax exemptions to continue for people with annual income upto 250000 dollars and the rich to pay taxes. Republicans did not agree. They wanted the rich to be exempt. So Barack Obama extended the exemptions to all for two years.
Some months back China and Russia had entered into an agreement to use each other’s currencies in mutual trade. Eurozone is in trouble and so euro is not desirable as global reserve currency. Following the example of China and Russia is an option for many countries.
An article of Thomas L. Friedman “The Story that refuses to die” appeared on The Indian Express on 1 December 2009. He begins with Maj. Nidal Malik Hasan who killed American soldiers at Fort Hood and says Hasan was another jihadist who was spurred to action by “The Narrative” that says America’s war on terror on war on Islam. There are many Muslims who hate America. It is not just because of the Narrative. If some Americans think that for two decades the US foreign policy has been largely dedicated to rescuing Muslims or trying to help free them from tyranny – in Bosnia, Darfur, Kuwait, Somalia, Lebanon, Kurdistan, post-earthquake Pakistan, post-tsunami Indonesia, Iraq and Afghanistan – they are fooling themselves. America’s actions in those countries or regions had nothing to do witch democracy. America did not go to war with Burma which has suppressed democracy. America did not go to war with Pakistan when Pervez Musharraf overthrew the government headed by Nawaz Sharif and established military dictatorship. America has supported dictatorships and overthrown democracies. America went to war on Iraq twice. First it was in 1991 to liberate Kuwait. After that sanctions were imposed on Iraq and life was made difficult for Iraqis. Second war in 2003 was unjustified and lot of damage was done. Some people called America is the greatest terrorist. Iraq was a secular country. After 2003 Muslim fundamentalists dominated Iraq. Life for Christians became difficult. America did not do much in Bosnia, Darfur or Lebanon. It left Somalia when its 15 soldiers died. Kurds in Iraq got freedom but Kurds in Turkey continue to be oppressed. America bombed Serbia for 77 days which led to Kosovo independence, dominated by Albanian Muslims, after 10 years. American actions In Kosovo helped the Muslims there and they may not hate America. In that region, Serbs hate America. America should have got out of Afghanistan soon after a civilian government was established and Afghan military was trained. It continued its presence. More than half of Afghan soldiers deserted within a year. Many Americans do not want to continue the war in Afghanistan. Al Qaeda is in Pakistan. Afghani Taliban were not against America. Many civilians died in American bombings. What has America achieved in Afghanistan? If a Muslim in Afghanistan becomes a Christian he can be put to death. Did America liberate Afghanistan from Taliban so that it may continue to persecute Non-Muslims? The status of women is not much better. Hamid Karzai’s wife is a doctor but she is not allowed by him to appear in public or meet others without burkha. His government is discredited. Barack Obama has announced a surge in Afghanistan and 30,000 soldiers will be sent there. NATO countries are questioning the war. Many Pakistanis have dried in drone attacks. Few terrorists and many civilians die in those attacks. Pakistanis hated America for that. When Taliban started to control Swat Pakistanis were horrified by their acts and they hated the Taliban more than America. Till then for Pakistanis it was America’s war on terror. If Muslims see “American Crusader-Zionist conspiracy” to keep Muslims down it is mainly due to its support to Israel. Israel has not vacated Gaza, West Bank and Golan Heights in compliance with a UN resolution. America has not gone to war over that. Palestinians continue to suffer in West Bank and Gaza. Some Palestinians resort to terrorism and Israel responds disproportionately causing collateral damage which means deaths of civilians and destruction of their property. America has tried for peace between Israel and Palestinians. Ehud Barak had made an offer which would have made Palestine independent. Yasser Arafat rejected it on the question of Jerusalem. That was a peaceful time. It did not last long. Ariel Sharon went to Temple Mount with soldiers and things were never the same again. Israel has started construction of settlements in West Bank. America has proved ineffective and Muslims see a conspiracy. If people hostile to America engaged in misinformation and disinformation against America they are doing what America did about Iraq. America is having a taste of its own medicine. America is in the process of getting out of Iraq. It should get out of Afghanistan soon. There is no need to search for Osama bin Laden. No one has seen him alive after August 2005. The videos supposedly featuring him were fake. Those who know he is dead and where he is buried will keep quiet. There is not much to be lost if the civilian government in Afghanistan falls. It is for Afghans to make democracy work in Afghanistan. Americans should take care of their security. If two people gatecrash the state dinner hosted by the President, meet him and shake hands with him, it leaves a lot to be desired in improvement of security. If a Muslim born and brought up in America is a psychiatrist in the army and kills fellow soldiers it is a serious issue. No American soldier expects to be killed by a fellow soldier in America. Some suggest political correctness led to non-screening of Maj. Nidal Malik Hasan. In that case political correctness should be thrown out. Safety first.